When I opened my DPC practice, retirement planning was the last thing on my mind. My focus was much more immediate: finding my first patients, covering my overhead, and making sure I could pay my own bills. Like many new DPC physicians, I supplemented my income by working shifts at an urgent care while slowly building my membership panel. During those early years, every dollar seemed earmarked for the practice, and my emotional bandwidth was consumed by simply trying to make the business succeed. It wasn’t until about two years into my journey—when the practice had become financially stable enough to let me breathe—that I finally had the capacity to seriously think about retirement. By then, however, my situation had changed. I had two employees whose financial futures mattered alongside my own. After weighing the available options, I ultimately chose a traditional 401(k). While it comes with administrative fees and additional paperwork, it provided the flexibility to maximize my own retirement savings while also offering meaningful benefits to my team. Looking back, I’m grateful I eventually made retirement planning a priority—but I also recognize why it wasn’t realistic during those challenging startup years.
One of the advantages of owning a Direct Primary Care practice is the flexibility to build wealth in multiple ways. Your practice itself may become a valuable asset, you may own the building your clinic occupies, and your business can generate predictable cash flow. Still, one of the most powerful tax-saving opportunities available to physician entrepreneurs is choosing a retirement plan that fits the current stage of your practice.
Unlike employed physicians, DPC owners have considerable flexibility in how they save for retirement. The best choice depends largely on one question: Do you have employees? The answer influences contribution limits, administrative responsibilities, and even how much you may be required to contribute on behalf of your staff.
Solo 401(k): Often the Best Choice for Physicians Without Employees
For physicians operating as a solo practice with no employees (other than perhaps a spouse), the Solo 401(k) is often the most powerful option.
A Solo 401(k) allows you to contribute both as the employee and as the employer. In 2026, the employee salary deferral limit is $24,500, and the practice can also make employer profit-sharing contributions, allowing total annual contributions of up to $73,500 (before age-based catch-up contributions, if applicable).
This dual contribution structure often allows physicians to save significantly more than they could with a SEP IRA, particularly during years when compensation is moderate. Many Solo 401(k) plans also offer Roth contribution options and participant loans, adding further flexibility.
The tradeoff is somewhat greater administrative complexity. Many brokerage firms offer low-cost plans, but customized plans may charge several hundred dollars per year. Once plan assets exceed IRS reporting thresholds, you’ll also need to file Form 5500-EZ annually.
SEP IRA: Simplicity at Its Best
The SEP IRA (Simplified Employee Pension IRA) remains an excellent option for physicians who value simplicity.
SEP IRAs are extremely easy to establish and administer. Most custodians charge little or no annual maintenance fee beyond the normal investment expenses associated with the funds you choose, and there are generally no annual IRS reporting requirements.
For 2026, employer contributions may be up to 25% of compensation, with a maximum contribution of $72,000.
The primary drawback is flexibility. Unlike a Solo 401(k), SEP IRAs do not allow separate employee salary deferrals, so physicians with lower compensation may not be able to save as much. In addition, once you have eligible employees, you generally must contribute the same percentage of compensation for every eligible employee that you contribute for yourself. That can become expensive as your practice grows.
For these reasons, many physicians begin with a SEP IRA during their earliest years before eventually transitioning to another plan.
SIMPLE IRA: A Good Bridge for Small Practices
Once you begin hiring employees, the SIMPLE IRA becomes another option worth considering.
Designed for businesses with 100 or fewer employees, SIMPLE IRAs offer relatively low administrative costs while allowing employees to contribute toward their own retirement.
In 2026, employees may contribute up to $17,000 annually. Employers are generally required either to match employee contributions up to 3% of compensation or provide a 2% non-elective contribution for eligible employees.
Many custodians charge minimal or no annual administrative fees, making the SIMPLE IRA an affordable option for growing practices. The downside is that contribution limits are considerably lower than those available through a traditional 401(k), making it somewhat less attractive for physicians seeking to maximize retirement savings.
Traditional 401(k): Flexibility for Growing Practices
For established DPC practices with employees, a traditional 401(k) often provides the greatest long-term flexibility.
Traditional 401(k) plans allow employee salary deferrals, employer matching, profit-sharing contributions, Roth options, and sophisticated plan designs that can help physician owners maximize retirement savings while remaining compliant with IRS nondiscrimination rules.
These plans do require additional administration. Depending on the provider and plan complexity, annual expenses often range from several hundred dollars to several thousand dollars. Costs may include recordkeeping, third-party administration, compliance testing, and required IRS filings.
Despite these expenses, many physician entrepreneurs find that the additional flexibility is well worth the cost. This was ultimately the direction I chose for my own practice. By the time retirement planning became a priority, I wanted a solution that would allow me to save aggressively while also creating a meaningful benefit for my employees. For me, the administrative fees were simply part of investing in a more sophisticated business.
Cash Balance Plans: For Highly Profitable Practices
For physicians with particularly high incomes who are already maximizing their 401(k), a cash balance plan may provide another level of tax-advantaged savings.
Cash balance plans are a type of defined benefit plan that can permit deductible retirement contributions well into the six figures, depending on age and income. They are especially attractive for mature, consistently profitable practices whose owners are trying to reduce taxable income while accelerating retirement savings.
The tradeoff is complexity. These plans require actuarial calculations, annual administration, and significantly higher fees than defined contribution plans. They also commit the practice to ongoing annual contributions, making them best suited for businesses with stable cash flow.
Choosing the Right Plan as Your Practice Evolves
One of the lessons I’ve learned as a physician entrepreneur is that the “best” retirement plan changes as your practice grows. The plan that makes sense when you’re seeing your first handful of patients may not be the one that serves you five years later with multiple employees and a thriving business.
A Solo 401(k) is often ideal for physicians without employees. A SEP IRA offers remarkable simplicity for early-stage practices. A SIMPLE IRA can provide an affordable stepping stone for small teams. A traditional 401(k) frequently becomes the best long-term solution for established practices with employees, while cash balance plans can be a powerful addition for highly profitable physician entrepreneurs.
The important thing is not to feel guilty if retirement isn’t your first priority during those early startup years. Building a successful DPC practice requires tremendous focus, and many of us simply don’t have the financial or emotional capacity to think years into the future while we’re trying to survive the present. But once your practice begins to stabilize, retirement planning deserves a place on your strategic agenda. A conversation with a CPA and financial advisor who understand physician-owned businesses can help ensure you’re taking advantage of tax-efficient opportunities that may ultimately add hundreds of thousands—or even millions—of dollars to your long-term financial security.
Check out our Demystifying Finances of DPC on-demand course, which includes a webinar by seasoned financial advisor Max Clifford on Retirement Savings for Physicians. You can also learn more about his services and schedule a free consultation here.
If you’d like more guidance launching or growing your own direct care practice, DPC Pediatrician offers a startup guide, coaching programs, on-demand courses, and even one-on-one consulting.
